Switzerland
in 1999 ratified the new Swiss Electricity Market Law. The primary aim of this
law was to ensure that the power/electricity generation sector moves from a
regulated to a deregulated environment. Switzerland is one of the few countries
that does not produce much of fossil fuels and relies heavily on renewable
forms of energy especially nuclear power and hydro projects. Although
presently, Switzerland is a net importer of power to meet its internal demands
however, the electricity generation has picked up pace in the recent years
recently which has been forecasted grow in the future at a very fast pace.
According
to the study, ‘Switzerland
Power Market Outlook to 2030, Update 2018 - Market Trends, Regulations, and
Competitive Landscape’, some of the companies that are currently
operating in this segment includes Axpo Holding AG, BKW AG Alpiq Holding AG.
The competition in the power generation sector within companies is very stiff.
Only a few of the companies hold majority of the market share because of their
ability to invest huge amount of money and also possess the technological expertise
to produce electricity at the lowest cost. They also have the potential to make
profits while simultaneously incurring huge costs. All these factors make the
entry of new players practically impossible. This has resulted in the market to
be highly consolidated. The power market has other players but they have
significant influence over the market.
Oil
is the largest contributor in terms of sources of electricity generation which
is followed by nuclear sources, hydroelectric power plants, and natural gas
plants.
The
regulatory landscape of the energy production in Switzerland consists of Swiss
Federal Office of Energy is the centre concerned with issues of energy supply
and energy use at the Federal Department of the Environment, Transport, Energy
and Communications. This body creates and implements the entire action plan
concerning energy production and is also responsible for increasing the overall
share of renewable sources of energy which would ultimately lead to reduction
in the CO2 emissions. Most of the energy generated is used as a fuel in order
to ensure vehicular movement which would be followed by electricity.
There
are 2 variations of prices of electricity that prevail in the Swiss energy
market. These include the wholesale and the retail prices. The wholesale
electricity is traded over the counter and therefore likely to be below the
market prices. A very small proportion of the total electricity consumption
goes in the form of wholesale electricity generation. Retail prices are market
prices. The recent trend that has been witnessed in the Retail Prices segment
is an increase in the prices. This trend is expected to continue for the next
couple of years which varies upon the location of the supply station from where
the electricity is being supplied.
The
overall Swiss power market is expected to grow in the coming years. The forms
of energy shall majorly shift to either nuclear or hydroelectric projects due
to the growing emergence of renewable forms of energy. The competition is very
stiff with very few companies holding majority of the market share which gives
the benefit of economies of scale. The new entrants need to competitively price
their services in order to ensure that they are able to compete with existing
giants.
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